Carbon plan ‘may damage competitiveness’

12-07-2011

Many industry sectors are deeply concerned their competitiveness will be damaged under the Federal Government’s proposed carbon tax scheme, says the Australian Industry Group.

“This is especially so in these very uncertain economic times when manufacturing in particular is experiencing extremely stressful economic conditions," Australian Industry Group Chief Executive Heather Ridout said today.

Ms Ridout said while the Government has gone some way to addressing industry issues, the climate change package fell short in a number of critical areas.

Main concerns include:

• The measures providing transitional support to trade exposed businesses need to be strengthened
• The initial price of $23 is excessive and should be reduced
• There is no plan for cleaning out the existing array of inefficient and costly greenhouse gas abatement measures

Ms Ridout said many exporting and import-competing businesses would be exposed to a sharp erosion of competitiveness. 

“For some businesses these extra costs could equate to almost 2.5 per cent of revenue and imply a significant reduction in their margins, Ms Ridout said.

"Further, the design of the support programs for manufacturing has and emphasis on grants for investment in innovation and leaves businesses exposed to extra costs in the meantime. Moreover, the design of the grants program itself raises issues including accessibility and flexibility to meet the varied needs of business and the Government needs to consult closely with business on this.

"The initial price of $23 a tonne, which the Greens took to the last election, will present a major shock to industry and there is a significant risk that in 2012-13, the carbon price in Australia will be above global prices.

"The $23 price is particularly hard to accept when it is added to the impact of the numerous existing, mostly wasteful, carbon reduction measures imposed by federal and state governments. The fact that the package does not do anything to clean out these measures leaves industry with a much greater effective price on carbon.

"The Government has quite rightly sought to provide the greater degree of certainty required to support investment, particularly in energy generation, and this will be welcomed by those supplying into this industry.”

Ms Ridout says Ai Group will continue to seek improvements to the package.

“We will consult closely with our member companies in the coming months as the package moves through the Parliament and the review processes," Ms Ridout said.

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